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GoldenBlue Co., Ltd files a complaint against Carlsberg group to Fair Trade Commission

Reporting unfair transactions such as termination of distribution using superior status, setting excessive sales targets, and forcing product orders.

GoldenBlue

GoldenBlue Co., ltd said it filed a complaint with the Fair Trade Commission against Carlsberg Group on July 5 for violating the Monopoly Regulation and Fair Trade Act.

This comes about four months after GoldenBlue Co., Ltd received a unilateral notice of termination of the distribution contract from Carlsberg Group on March 7.

▶ The details of the report submitted by GoldenBlue Co., Ltd. to the Fair Trade Commission and related facts are as follows.

First, Carlsberg Group has continued to engage in unfair trade practices since the start of the agreement with GoldenBlue Co., Ltd. by using its superior trading position to force excessive sales targets and purchases of goods.

Since GoldenBlue began distribution of Carlsberg, Carlsberg Group has leveraged its trading superiority to set unreasonable sales targets and force additional volume orders.

Accordingly, GoldenBlue Co., Ltd. had no choice but to spend marketing expenses for the Carlsberg brand, and as a result, GoldenBlue Co., Ltd.'s operating expenses for four years from 2018 to 2021 amounted to about 50% of its total net sales.

Second, due to Carlsberg Group's unfair and unilateral refusal of transactions (termination), GoldenBlue Co., Ltd. suffered serious damage, such as the human, material costs it invested in being virtually nullified.

While distributing Carlsberg brand, GoldenBlue Co., Ltd. has invested a huge amount of investments over the past four years, including hiring a significant number of people and establishing a B&S(Beer and Sprits) headquarters. This was based on confidence in the long-term partnership commitment between Carlsberg Group and GoldenBlue Co., Ltd.

GoldenBlue Co., Ltd. expected to make long-term investment returns if its beer distribution business stabilizes in the future, although the deficit continued due to excessive sales targets, additional orders, and investments in above costs.

However, when GoldenBlue Co., Ltd signed an import, distribution contract with another beer group, Molson Coors Beverage Company (MCBC), around November 2021, Carlsberg Group began to show an attitude against trust, offering unusual conditions for extending the contract. In addition, from January 2022, when the existing contract expired and an extension was needed, despite of GoldenBlue Co., Ltd’s continuous requests for extension of contract, Carlsberg group responded with only one or two months short-term extensions and offered excessive contract conditions. At the end of October 2022, not even a short-term contract was signed, creating an unprecedented situation in which GoldenBlue Co., Ltd distributed Carlsberg contract-free.

GoldenBlue Co., Ltd continued to distribute Carlsberg brand in good faith with the hope that the contract with Carlsberg Group would be extended, but Carlsberg Group has consistently carried out preliminary work to terminate the contract, including the establishment of the Carlsberg Korea and recruiting trade, marketing and logistics employees.

Even at the end of October 2022, Carlsberg Group did not explicitly announce the termination of the contract. Carlsberg Group maintained distribution of Carlsberg products through GoldenBlue Co., Ltd even after that date. Carlsberg Group sent a unilateral contract termination notice to GoldenBlue Co., Ltd on March 7, 2023, when direct distribution through Carlsberg Korea became possible. Carlsberg Korea was established in October 2022, and Carlsberg Group has been directly distributing and selling Carlsberg 500ml can products at convenience stores and other places through Carlsberg Korea since early May 2023.

Due to the unilateral termination of Carlsberg Group's transaction using this superior position, all of GoldenBlue Co., Ltd 's investments under the trust of its long-term partnership with Carlsberg Group have become sunk costs, and in conclusion, GoldenBlue Co., Ltd suffered huge losses.

"This Fair Trade Commission complaint is the minimum defense that small domestic company can act against global companies," said an official at GoldenBlue Co., Ltd. “Not only it forced excessive sales target and purchase of products during contract period, it has given hope-torture to extend the contract using superior position. Behind the scenes, pre-work for termination of existing contracts, such as the establishment of a domestic corporation for direct distribution, is all a disregard for domestic companies and an apparent abuse of power by multinational companies," he added.

Meanwhile, GoldenBlue Co., Ltd has demanded compensation for damages related to the above unfair trade practices since March 7, 2023, when it received a unilateral contract termination notice, but Carlsberg Group has only responded passively by appointing a legal representative, but no progress has been made in this regard.

As a result, GoldenBlue Co., Ltd. decided that Carlsberg Group was no longer willing to engage in negotiations, and as a small domestic company damaged by Carlsberg Group, it inevitably filed a lawsuit with the Fair Trade Commission for Carlsberg Group’s violation of the Fair Trade Act.

GoldenBlue Co., Ltd. will inform the media of Carlsberg Group's tyranny more specifically in order to prevent the emergence of another small Korean company that will be damaged by the abuse of its superior status by multinational companies. Furthermore, while requesting a meeting with the Danish ambassador, all measures will be sought with the government, companies, and associations to ensure that such wrong business behavior of global companies is to be prevented from Korea.